Hacking payouts may drive up privacy damages in UK

LONDON | By Estelle Shirbon

LONDON (Reuters) - Big payouts to victims of phone-hacking by Rupert Murdoch's now-defunct News of the World paper are set to drive up the damages awarded in privacy cases in Britain, according to a recent judgment and experts in media law.

News International, the British newspaper arm of Murdoch's News Corp, has reached out-of-court settlements with dozens of people whose voicemails were illegally intercepted by the Sunday tabloid.

Most of the payouts have been in a range of roughly 30,000-60,000 pounds but a small number have been much higher. Singer Charlotte Church received 600,000 pounds, of which half was for legal costs, while actor Jude Law accepted 130,000 pounds and actress Sienna Miller got 100,000.

In a judgment last month on a privacy case unrelated to the News of the World scandal, Justice Michael Tugendhat suggested that the settlements offered by News Corp could embolden courts to award higher damages for breach of privacy.

"Recent settlements in the much-publicised phone-hacking cases have been reported to be in sums far exceeding what in the past might have been thought to be available to be awarded by the courts," the judge wrote.

"The sums awarded in the early cases such as Campbell were very low. But it can no longer be assumed that damages at those levels are the limit of the court's powers," Tugendhat wrote.

The Daily Mirror tabloid newspaper was ordered to pay model Naomi Campbell 3,500 pounds in 2004. It was one of the first high-profile privacy cases to go through the British courts after the European Convention on Human Rights, which enshrines the right to a private life in its Article 8, was incorporated into British law in 1998.

"FAIR WARNING"

In line with the Campbell case, damages in privacy cases have mostly been in the low thousands of pounds, although in 2008 the bar was raised dramatically by the case of Formula One boss Max Mosley.

He was awarded 60,000 pounds after the News of the World published details and video of a five-hour sadomasochistic sex session involving prostitutes. Mosley's award has remained the high watermark for privacy damages.

Three media lawyers who spoke to Reuters said Tugendhat had signalled that the payouts in the phone-hacking scandal were likely to have a knock-on effect on future court cases even though they did not set a direct precedent.

"Tugendhat was giving fair warning to newspapers that if they invade a person's privacy they will face much bigger awards," said Mark Stephens, partner at Finers Stephens Innocent.

He said that while the Mosley award was previously seen as the "top of the tree" in the field of privacy law, five- or even six-figure awards could become more common.

Jonathan Coad, partner at Lewis Silkin, said the hacking settlements had helped to put a price on the loss of privacy.

"The effect is almost subliminally to push awards up," he said.

Coad did not, however, expect the courts to start routinely awarding claimants hundreds of thousands of pounds. He said the hacking payouts were very high because it was in News Corp's interest to avoid embarrassing trials in open court.

"BIG FAT CHEQUES"

"What was going on at the News of the World was so ghastly that News International had no choice but to write some big fat cheques," he said, adding that Church would "never" have obtained 300,000 pounds in damages from a court.

News Corp said last month it had spent $87 million last quarter in costs related to the ongoing UK investigations, 85 percent of its legal costs and the rest settlements.

Luke Staiano, of the firm Carter-Ruck, pointed out that while some of the phone-hacking claims had been settled, some of the dozens still in the pipeline could still come to trial, which could have a direct impact on future breach of privacy cases.

"These are claims which concern invasion of privacy through the illegal interception of voicemails. If the courts find in favour of the claimants and award damages, then that will set a precedent for future privacy cases," he said.

Staiano said Tugendhat's judgment was "an acknowledgement that the early awards by the court in privacy cases were very low, and in the future they are likely to be higher."

He added that higher awards might also encourage more cases to be brought:

"As matters currently stand, many people who have had their privacy invaded may believe that any award by the Court would be so low that it would not adequately compensate them for the harm done or justify the time, stress and cost of pursuing the case through the Courts.

"If the general level of damages awarded in privacy cases is increased, then potential claimants may consider that those downsides of pursuing a claim are justified."